The Child and Dependent Care Tax Credit (CDCTC) is a completely refundable credit that many Americans may not be aware of, and it could give families with two or more children up to $8,000. The credit can be worth up to $4,000 for one child.
However, many Democratic lawmakers are disappointed that this tax relief hasn't gained nearly as much attention as the increased child tax credit did last year.
According to Politico's Brian Faler, this has led to a lot of "finger-pointing" with some Democrats arguing that the White House hasn't done enough to publicize it.
A group of Democratic senators recently complained to the Biden administration that "the Treasury Department and White House seem to have made no meaningful effort to raise awareness of the $4,000 per child CDCTC."
"As families live under the burden of rising prices, they need to know about the solutions that their government is providing them. In this case, we have already passed a credit to alleviate one of the largest burdens families face-child care. Families just need to be equipped to take advantage of it. Together, we can ensure Americans get all the tax credits for which they are newly eligible for this tax season-those which they deserve," they pointed out.
For one thing, the CDCTC is sometimes mistaken with child tax credit, which offered qualified families up to $3,600 for children under the age of six and up to $3,000 for children aged six to seventeen.
To avoid confusion with the child credit, Democrats briefly discussed renaming it. Some lawmakers refer to it as the child care tax credit, while tax preparers refer to it as the babysitter credit, according to Faler.
For many, it's hardly unexpected that the increased credits have piqued the interest of parents. For one thing, it benefits a lot more people, according to Faler. And, unlike the dependent care provision, they didn't have to wait until tax season to start making use of it following last year's expansion."
When completing federal tax returns this year, parents should have all receipts, papers, or paperwork detailing how much was spent directly on child care-which could include daycare and camp services, as well as related transportation expenditures to and from there-on hand. Before submitting their tax return, they must also complete Form 2441 and attach it to it.
"You must identify all persons or organizations that provided care for your child, dependent, or spouse," the Internal Revenue Service explained on its website. "To identify the care provider, you must give the provider's name, address, and taxpayer identification number (TIN)."